Aquarion soaking consumers

January 29, 2013 - 2:00 AM

We urge the state Public Utilities Commission to take a hard look at the Water Infrastructure and Conservation Adjustment pilot program it enacted in 2009, allowing Aquarion Water Co. to raise rates through a surcharge between rate hike cases.

On Jan. 17, the commission approved Aquarion's request to increase the WICA surcharge to be paid by consumers in 2013. As a result, typical customers of Aquarion, which serves Hampton, North Hampton and Rye, will feel a drain on their wallets as their water bills increase an average of $8.45 this year. While that doesn't seem like a lot of money, the surcharge is on top of a temporary rate increase of 8.8 percent enacted in September as part of a rate case filed by the company last May, in which it is seeking an eventual permanent 18.3 percent increase.

The company is also requesting, as part of that rate case, to make the WICA pilot program permanent. That rate case — which is being staunchly opposed by the towns of Hampton and North Hampton — is ongoing, but if history is any indicator, customers will probably get soaked again.

The question is, how much?

We believe the WICA program should be eliminated. The WICA tariff provisions were approved as a pilot program in Aquarion's 2009 rate case, in which the company was granted a 17.4 percent rate hike. The program was intended to allow the company to recover — through a surcharge on customer bills — the fixed costs of non-revenue capital projects between general rate cases.

Since 2010, Aquarion has expended $2,492,141 in capital investment, largely for water main replacement, to address issues under the WICA program.

The intent of WICA, as advocated by Aquarion in 2009, was to decrease the frequency of rate cases and rate shock, and to enhance levels of reliability (and reduce water consumption) by having Aquarion proactively replace infrastructure nearing the end of its useful life.

On all accounts, the program has failed.

Not only is Aquarion receiving the benefits of WICA, but it's also still seeking double-digit rate increases nearly every three years.

This is a key reason Hampton opposes Aquarion's request to make WICA permanent. In 2008, the company was granted a 17.4 percent increase, and an 18.64 percent increase was imposed in 2006. As for WICA improving the reliability of service, that is debatable.

The New Hampshire Office of the Consumer Advocate is opposed to keeping the program going, noting that it hasn't lived up to its stated goal. Consultant Scott J. Rubin, on behalf of the Office of the Consumer Advocate, noted the WICA charge as implemented allows Aquarion to recover costs associated with essentially any distribution system capital expenditures that are not revenue-producing. The list of work being funded under the WICA program so far includes responding to main breaks and other equipment failures, and upgrades from manual meters to meters that can be read remotely. Much of the projected WICA spending for the next three years is for meter upgrades and responding to main breaks or other emergencies.

To us, that seems like a typical cost of doing business that should be part of the company's overall budget.

On that note, the company, as part of its current rate case, is seeking a return on equity of 10.25 percent, which represents a 7.85 percent return on investment.

In these economic times, it feels like the consumer is once again taking the hit while investors who don't even live in Hampton, North Hampton or Rye pad their wallets.